EUROZONE ISSUANCE: EGB Supply – W/C 12 January (1/2)
Jan-09 14:49
The EU is scheduled to hold a syndication in the upcoming week while the EFSF has sent an RFP for a syndicated transaction. In addition, the Netherlands, Austria, Italy, Germany, and Spain will be looking to hold auctions during the week. We pencil in issuance of E52.3bln for the week, down from E67.2bln this week. We pencil in syndications from Ireland and Greece. There is also a chance of a French syndication. See our full January syndication expectations on page 3.
- The EU will hold a syndication in the upcoming week with a mandate likely on Monday and transaction likely on Tuesday.
- The EFSF has sent a request for proposal for an upcoming transaction, subject to market conditions. This means a transaction in the upcoming week is likely, and comes fully expected as we noted in last week’s publication. We expect a dual-tranche EFSF syndication. There has been a dual-tranche transaction in early January each year since 2021 with the transactions gradually growing in size (E5.0bln in 2021, E5.5bln in 2022, E6.0bln in 2023 and E7.0bln in 2024, E7.0bln in 2025). We see E5.0bln as the minimum transaction size but a larger transaction is very possible. The EFSF will look to issue less in 2026 than in 2025 (E18.5bln, down from E21.5bln). But we still pencil in a E5-7bln transaction size.
- The Netherlands will hold its first auction of the year on Tuesday, selling E4-5bln of the new 5-year 2.50% Jan-31 DSL (ISIN: NL0015073TQ2) via conventional auction.
- Austria will follow later on Tuesday with a combined E2.3bln of the on-the-run 10-year 2.95% Feb-35 RAGB (ISIN: AT0000A3HU25) and the on-the-run 30-year 3.15% Oct-53 RAGB (ISIN: AT0000A33SK7) on offer.
- Italy will also come to the market at the same time as Austria on Tuesday. A new 3-year 2.40% Mar-29 BTP (ISIN: IT0005689960) will be launched for E3.5-4.0bln (we had pencilled in a February launch for this issue). The MEF has also announced that due to the syndication held on 8 January (7-year BTP launch / 20-year Green BTP tap) that the 3-year BTP will be the only line on offer at this auction (which was our base case since the syndication was mandated).
- Germany will conclude auction issuance for Tuesday with E6bln of the new Apr-31 Bobl (ISIN: DE000BU25067) on offer. The coupon will be confirmed on Monday.
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BOC: Changes In The Rate Decision Statement – Dec vs Oct
Dec-10 14:47
A comparison of December's rate decision statement vs the previous edition in October in the PDF below:
BOC: BOC Maintains Policy Rate at 2.25%, Signals Hold Unless Material Shock
Dec-10 14:45
- "If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment," statement Wed says, echoing last decision.
- Bank says while it is prepared to respond to material shocks, it reiterates monetary policy cannot restore supply hit from US trade war.
- Most global economies and Canada's continue to show some resilience amid US trade war.
- Moderate Q4 GDP is still expected after a surprisingly strong Q3. Labour market shows some improvement but hiring plans are modest.
- Bank sees CPI inflation staying near 2% target as it has been for over a year now. Core inflation remains between 2.5-3%.
BOC: Instant Answers For Bank of Canada Interest-Rate Decision
Dec-10 14:45
Following are the Instant Answers for the Bank of Canada interest-rate decision:
- Target for overnight rate: Unchanged at 2.25%.
- Does the Bank signal it is prepared to lower rates in the future? Not answered.
- Does the Bank signal it is prepared to raise rates in the future? Not answered.
- Does the Bank say the policy rate appears appropriate if its economic forecast is realized? YES.
- Does the Bank signal it intends to leave rates on hold? YES.
